Where Do Hedge Funds Stand On Apyx Medical Corporation (APYX)?

Debasis Saha

In this article we are going to use hedge fund sentiment as a tool and determine whether Apyx Medical Corporation (NASDAQ:APYX) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Apyx Medical Corporation (NASDAQ:APYX) shareholders have witnessed a decrease in hedge fund interest recently. Apyx Medical Corporation (NASDAQ:APYX) was in 6 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 13. Our calculations also showed that APYX isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we're going to take a gander at the latest hedge fund action regarding Apyx Medical Corporation (NASDAQ:APYX).

What have hedge funds been doing with Apyx Medical Corporation (NASDAQ:APYX)?

At the end of September, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from one quarter earlier. On the other hand, there were a total of 8 hedge funds with a bullish position in APYX a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is APYX A Good Stock To Buy?
Is APYX A Good Stock To Buy?

Among these funds, Archon Capital Management held the most valuable stake in Apyx Medical Corporation (NASDAQ:APYX), which was worth $11.8 million at the end of the third quarter. On the second spot was Pura Vida Investments which amassed $4.3 million worth of shares. Horizon Asset Management, Renaissance Technologies, and Royce & Associates were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Archon Capital Management allocated the biggest weight to Apyx Medical Corporation (NASDAQ:APYX), around 2.37% of its 13F portfolio. Pura Vida Investments is also relatively very bullish on the stock, dishing out 0.22 percent of its 13F equity portfolio to APYX.

Since Apyx Medical Corporation (NASDAQ:APYX) has witnessed a decline in interest from the smart money, logic holds that there was a specific group of funds that slashed their full holdings last quarter. Intriguingly, Greg Martinez's Parkman Healthcare Partners said goodbye to the largest position of the "upper crust" of funds monitored by Insider Monkey, valued at close to $0.4 million in stock. Ryan Tolkin (CIO)'s fund, Schonfeld Strategic Advisors, also dumped its stock, about $0.2 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 2 funds last quarter.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Apyx Medical Corporation (NASDAQ:APYX) but similarly valued. We will take a look at Glory Star New Media Group Holdings Limited (NASDAQ:GSMG), Gencor Industries, Inc. (NASDAQ:GENC), Five Star Senior Living Inc. (NYSE:FVE), Timkensteel Corp (NYSE:TMST), Electrameccanica Vehicles Corp. (NASDAQ:SOLO), Weyco Group, Inc. (NASDAQ:WEYS), and Aptinyx Inc. (NASDAQ:APTX). This group of stocks' market valuations are similar to APYX's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GSMG,9,613,2 GENC,4,22378,0 FVE,6,23959,1 TMST,12,9445,0 SOLO,3,1006,0 WEYS,3,3042,-1 APTX,7,36093,-1 Average,6.3,13791,0.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.3 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $24 million in APYX's case. Timkensteel Corp (NYSE:TMST) is the most popular stock in this table. On the other hand Electrameccanica Vehicles Corp. (NASDAQ:SOLO) is the least popular one with only 3 bullish hedge fund positions. Apyx Medical Corporation (NASDAQ:APYX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for APYX is 33.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on APYX as the stock returned 64.1% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.

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